Correlation Between Prudential Core and Total Return
Can any of the company-specific risk be diversified away by investing in both Prudential Core and Total Return at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Prudential Core and Total Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Core Conservative and Total Return Fund, you can compare the effects of market volatilities on Prudential Core and Total Return and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Prudential Core with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Core and Total Return.
Diversification Opportunities for Prudential Core and Total Return
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Prudential and Total is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Core Conservative and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return and Prudential Core is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Prudential Core Conservative are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Prudential Core i.e., Prudential Core and Total Return go up and down completely randomly.
Pair Corralation between Prudential Core and Total Return
Assuming the 90 days horizon Prudential Core is expected to generate 1.27 times less return on investment than Total Return. But when comparing it to its historical volatility, Prudential Core Conservative is 1.01 times less risky than Total Return. It trades about 0.03 of its potential returns per unit of risk. Total Return Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 714.00 in Total Return Fund on September 3, 2024 and sell it today you would earn a total of 57.00 from holding Total Return Fund or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Core Conservative vs. Total Return Fund
Performance |
| Timeline |
| Prudential Core Cons |
| Total Return |
Prudential Core and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Core and Total Return
The main advantage of trading using opposite Prudential Core and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Core position performs unexpectedly, Total Return can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Total Return will offset losses from the drop in Total Return's long position.| Prudential Core vs. Fidelity Sai Inflationfocused | Prudential Core vs. Blackrock Inflation Protected | Prudential Core vs. Tiaa Cref Inflation Linked Bond | Prudential Core vs. Western Asset Inflation |
| Total Return vs. Jhancock Diversified Macro | Total Return vs. Aqr Diversified Arbitrage | Total Return vs. Huber Capital Diversified | Total Return vs. Prudential Core Conservative |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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